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Nationalization of European banks and stockholders

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  • Fri, Feb 27, 2009 - 12:01am

    #1
    slabinja

    slabinja

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    Nationalization of European banks and stockholders

Does anyone know the answer to this question:

If a bank is nationalized in Europe, what happens to the stockholders (preferred and common) ? 

Since, as I have been told, European banks are already partly nationalized, would the stockholder lose all of their money as what happened with Fannie and Freddy Mae in the States?

Any answers or input would be appreciated.

 

Thanks 

 

  • Fri, Feb 27, 2009 - 12:08am

    #2
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

If they’re talking about true nationalization, yes, all stockholders lose everything because the government then owns all cashflows rather than stockholders owning them.  Stock price then tends toward zero because nobody wants the shares.    

  • Fri, Feb 27, 2009 - 12:47am

    #3
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

Has this happened with any European banks?

  • Fri, Feb 27, 2009 - 01:34am

    #4
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

Yes.  There have been a few stories in the Financial Times about different Euro banks being nationalized.  I only glance at the headlines so I don’t remember which banks, or whether they had already been nationalized or if it was coming down the road.  Either way, not good.  If a bank is insolvent, the stock should be zero anyway.  So the possibility of nationalization should be telling shareholders of that particular bank that it’s insolvent, stock should be zero, they should sell.

 

  • Fri, Feb 27, 2009 - 01:44am

    #5
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

Royal Bank of Scotland (RBS) is practically all nationalized now, and the Bank of England is foaming at the mouth to grab others.  The rest of Europe looks grim.  They lent way too much money to eastern Europe, and many of those loans are now being defaulted on.  Jim Rogers, who for years has recommended Swiss francs, is now out of Swiss francs and categorizes their currency as "flawed" along with the $, eruo, and just about everything else except the Yuan.

There are good articles in Financial Times and the Economist on this.

  • Fri, Feb 27, 2009 - 03:47am

    #6
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

Anglo Irish Bank has been nationalized.  Allied Irish Bank and Bank of Ireland reportedly have problems too. 

http://www.marketwatch.com/news/story/anglo-irish-bank-nationalized-after/story.aspx?guid={E8CB72C9-C1D3-4F7C-B140-DE5B76CFCC3F}

 

  • Mon, Mar 02, 2009 - 11:44pm

    #7
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

From what I’ve been told, when the Royal Bank of Scotland was nationalized, the stockholders did not lose out.  Correct me please if this information is incorrect.

  • Mon, Apr 13, 2009 - 03:24pm

    #8
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

I own Royal Bank of Scotland preferred shares and they are down about 70% in the past year.  However, they still paid the Mar. 31, 2009 dividend on time.  RBS is 70% owned by the government.

  • Wed, Apr 15, 2009 - 10:34am

    #9
    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

[quote=slabinja]

Does anyone know the answer to this question:

If a bank is nationalized in Europe, what happens to the stockholders (preferred and common) ? 

Since, as I have been told, European banks are already partly nationalized, would the stockholder lose all of their money as what happened with Fannie and Freddy Mae in the States?

Any answers or input would be appreciated.

 

Thanks 

 

[/quote] preferred share holder will be more secure then the common stock holders as they are more "senior".

Because I fear the economic situation I want to move some of my investment to physical gold. I do not sure where to but it from but my friend told me he purchase 2 kg from a company call AGR: http://www.agrfinancial.co.uk

can any body help me and tell me about more companies selling gold that i can trust?

  • Wed, Apr 15, 2009 - 01:34pm

    #10
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Nationalization of European banks and stockholders

Have you tried a local coin shop?  A local one in my area has lower prices than a lot of others nationally (at least in the US)

 

You’re better off holding physical gold than a certificate from what I’ve researched. Of course then you have to deal with storing it.  But then you will have complete ownership of it, it will be tangible.

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